HSE SOUTH, which covers both Cork and Kerry, has indicated that it could face a financial shortfall of up to €20 million by the end of the year.
The Health Service Executive told trade unions at a meeting yesterday that it had overspent by €11.8 million in the first six months of the year.
It said that without remedial action this deficit could rise to €20 million by the end of the year.
The HSE in the south said that overall its budget had been reduced by €63.5 million for 2011 compared with 2010.
Informed sources said HSE officials told unions it was focusing on procurement savings as part of its attempts to rein in spending.
However, sources said that expenditure on hiring staff from agencies, as well as on overtime, could also be affected.
Informed sources said that in some large hospitals in the region the HSE would seek to replace agency nurses with student nurses as much as possible.
There will also be cutbacks to overtime. Unions fear the new cuts will have an impact on services provided by the HSE in the south in the months ahead.
The HSE in the south said last night that it would not be commenting on the meeting held by its officials with trade unions yesterday.
The HSE nationally reported several weeks ago that it had run up a financial deficit of more than €200 million for the first six months of the year.
It subsequently introduced a new series of measures in a bid to bring spending at the health authority back into line for the remainder of the year.
These measures included an intensification of the moratorium on recruitment to include some positions which had previously been exempt.
The HSE said it would reconsider these measures in September when its financial figures for the year to July became available.